What Is Credit Card Residual Interest and How Can You Skip it?

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Remaining interest is an amount of added interest you collect between a billing date or your payment. If you are paying off the substantive balance in 1 final drop, an interest pinned onto next month’s statement could come as an unwelcome shock.

What is residual interest?

Read the clear print in the credit card statement and you’ll observe the sentence that reads something like this: Paying your earlier statement balance may not pay your balance.

To know that how it’s possible, we have to learn some terms or how they apply to your credit card account:

Billing cycle: Period of the time in between your credit card statement — approx 30 days, depending on a creditor. If your billing cycle starts on the 15th of the month, then it would end on the 14th of next month.


Closing date of an account: last day of the billing cycle.

Due date: Day of payment for the last billing cycle is due. If anything lower than the full amount is paid off by the due date, the remaining amount is charged interest or added to the next month’s billing

Full payoff amount: The whole amount that you owe, as well as the accrued interest. If you bear the balance, the number will rise daily.

Grace period: At a period between account closing date or your due date — at least 21 days, if your credit card company provides it. If you pay your balance full every month or don’t take out your cash advances, the credit card acquirer won’t charge interest on your buying during the period.


When you will get the next month’s statement, you will see that you were charged interest on $1,000 for the ten days between the closing account date or your payment (probably the couple more days for a time it took for a statement to come in the mail).

It might only be a hard few dollars, but if you don’t pay, that amount will proceed to accrue interest, you also will get charged late fees or your credit score will take a hit for late payments.

How to pay off Residual interest?

The best way to keep away from residual interest is to pay off your credit card balance each month. (If you’re new to the entire credit card thing, check out this lead for how to use the credit card without going into debtors.)


However, if you are close to paying off your card after earlier carrying the balance, the better way to keep away from residual interest is to call your credit card company. Ask for the entire payoff amount as of the date the creditor will receive the payments — remember that could be a hard few days later than the date you send the payments.

If there are any questions about whether a company will accept your payment later than a particular date (think: online payments and mail delivery late), you might want to add little extra money beyond the specified payoff amount. After all, it is very easier to deal with an overpayment than pay for another month of accrued interest.

To be on the secure side, let check your statement for minimum a next two months to make sure you are not still carrying the balance and were charged further interest. At that point, you may begin your debt-free happy dance.


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